What is Moody's?


Moody’s Investors Service is a credit ranking agency that offers Insurance Financial Strength Ratings, which inform Policygenius’ best company recommendations.

At Policygenius, we use several factors – including third-party rating groups – to determine our best life insurance company recommendations. Moody’s Investors Service provides ratings and reviews of “Insurance Financial Strength,” the ability of insurance companies to repay claims punctually. Along with Standard & Poor’s and Fitch Group, Moody’s is considered a “Big Three” credit rating agency.


  • Moody’s rates life insurance companies based on their ability to repay short and long-term debts

  • Policygenius uses Moody’s ratings to inform our editorially independent reviews of life insurance companies

  • According to Moody's, “Aaa” is the best possible rating and “C” is the worst possible rating

Why do Moody’s ratings matter for life insurance shoppers?

Once you’ve determined the type of life insurance policy you need, and after comparing premium rates, it can be difficult to decipher which life insurance company is the best option. Life insurance death benefits pay out after you’re gone, so it’s natural to wonder if the life insurer you select will be reliable and financially stable enough to support your beneficiaries. That’s where Moody’s comes in.

Moody’s is a respected, widely utilized source for opinions on the financial strength of banks, money markets, bond funds, and insurance companies. A life insurance policy is useless if it doesn’t do what it’s supposed to do: pay out a lump sum of cash to support your loved ones when you’re not able to. Moody’s weighs the outstanding debts and other financial risks of national life insurance companies and rates them according to a detailed scale.

How does Moody’s rating scale work?

Moody’s uses a multi-pronged rating system to determine financial strength. It accounts for both short and long term financial risk for an insurance company.

Moody’s short-term rating definitions

Moody’s short-term ratings are based on an insurance company’s capacity to repay its short-term debt obligations.

Moody's designationAbility to repay short- term debts
P-1Prime-1: superior
P-2Prime-2: strong
P-3Prime-3: acceptable
NPNot Prime

Moody’s long-term rating definitions

Moody’s long-term ratings are based on an insurance company’s credit risk of fixed-income obligations. The ratings are based on the possibility that a life insurance benefit payout will not be honored as promised.

Moody's designationAbility to repay long-term obligations
AaaHighest quality, minimal risk
AaHigh quality, very low credit risk
AUpper-medium-grade, subject to low credit risk
BaaMedium-grade, moderate credit risk, may possess speculative elements
BaSubstantial credit risk, with speculative elements
BHigh credit risk, considered speculative
CaaVery high credit risk, poor standing
CaIn or very near default, highly speculative, some prospect of recovery in principal and interest
CLowest-rated class of bonds, typically in default, with little prospect for recovery of principal and interest

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How Policygenius uses Moody’s

Policygenius takes a comprehensive approach to determine the best life insurance companies available. We don't get paid for reviews and evaluate an extensive rubric of criteria, including Moody’s ratings, to come up with robust (and unbiased) reviews to match you with the right life insurance company for you.

Moody’s ratings factor into our Confidence category: consumer confidence based on scores from major financial rating institutions. We normalize ratings from Moody’s, Standard & Poor’s, and A.M. Best, and give companies a score out of 10.

To learn more, you can compare our life insurance company reviews or read our complete ratings methodology.

Moody's Ratings FAQs

How do I choose the best life insurance company?

The best life insurance company for most shoppers is one that offers the cheapest premiums for the amount of coverage they need. Beyond price and benefit amount, looking at a company’s third-party financial ratings and customer reviews should factor into your decision.

What life insurance company ratings should I look at?

Third-party ratings from firms like A.M. Best, Standard & Poor’s, and Moody's can give you peace of mind that a company is financially stable and will be around for a long time. You can also look at customer reviews from the Better Business Bureau and J.D. Power. These should be taken with a grain of salt, but you can be on the lookout for recurring complaints.

What is a good Moody's rating?

Moody’s assigns life insurance companies ratings from Aaa to C. Aaa is the best and C is the worst. Moody’s analyzes both short- and long-term financial risks to inform its ratings.

Life Insurance Expert

Rebecca Shoenthal

Life Insurance Expert

Rebecca Shoenthal is a life insurance editor at Policygenius in New York City, specializing in buying life insurance and the ins and outs of life insurance ownership. She's edited business books by the country’s top academics, politicians, journalists, thought leaders and CEOs, including venture capitalist John Doerr’s Measure What Matters, entrepreneur Scott Belsky's The Messy Middle, NYU Stern professor Scott Galloway's The Four, and technologist John Maeda's How to Speak Machine.

  Rebecca has a B.A. in Media and Journalism from the University of North Carolina at Chapel Hill.